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Accounting for latent attitudes in willingness-to-pay studies: the case of coastal water quality improvements in Tobago

Hess, S and Beharry-Borg, N (2011) Accounting for latent attitudes in willingness-to-pay studies: the case of coastal water quality improvements in Tobago. Environmental and Resource Economics. ISSN 0924-6460

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Abstract

The study of human behaviour and in particular individual choices is of great interest in the field of environmental economics. Substantial attention has been paid to the way in which preferences vary across individuals, and there is a realisation that such differences are at least in part due to underlying attitudes and convictions. While this has been confirmed in empirical work, the methods typically employed are based on the arguably misguided use of responses to attitudinal questions as direct measures of underlying attitudes. As discussed in other literature, especially in transport research, this potentially leads to measurement error and endogeneity bias, and attitudes should rather be treated as latent variables. In this paper, we illustrate the use of such an Integrated Choice and Latent Variable model in the context of beach visitors’ willingness-to-pay for improvements in water quality. We show how a latent attitudinal variable, which we refer to as a pro-intervention attitude, helps explain both the responses from the stated choice exercise as well as answers to various rating questions related to respondent attitudes. The incorporation of the latent variable leads to important gains in model fit and substantially different willingness-to-pay patterns.

Item Type: Article
Keywords: Beach recreation, Coastal water, Discrete choice, Integrated Choice and Latent Variable (ICLV) model, Latent attitude, Taste heterogeneity
Institution: The University of Leeds
Academic Units: The University of Leeds > Faculty of Environment (Leeds) > Institute for Transport Studies (Leeds)
Depositing User: Symplectic Publications
Date Deposited: 30 Mar 2012 08:04
Last Modified: 28 Nov 2014 12:30
Published Version: http://dx.doi.org/10.1007/s10640-011-9522-6
Status: Published
Publisher: Springer Verlag
Identification Number: 10.1007/s10640-011-9522-6
URI: http://eprints.whiterose.ac.uk/id/eprint/43628

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